Irish pharma — looking to the future

February 1, 2008
Susan Aldridge

Pharmaceutical Technology Europe

Pharmaceutical Technology Europe, Pharmaceutical Technology Europe-02-01-2008, Volume 20, Issue 2

Deciding where in the world to locate a new plant is a key decision for any pharma or biotech company - and there has never been more choice. Europe and the US now compete with the Far East and India, and what about the new EU states? Might Lithuania or Estonia turn out to offer advantages compared with France or Germany when it comes to finding the best place to take a new drug forward to the market place?

Deciding where in the world to locate a new plant is a key decision for any pharma or biotech company — and there has never been more choice. Europe and the US now compete with the Far East and India, and what about the new EU states? Might Lithuania or Estonia turn out to offer advantages compared with France or Germany when it comes to finding the best place to take a new drug forward to the market place?

Key points

Late in 2007, Merck&Co. Inc., the world's seventh largest pharmaceutical company, announced its decision to build a €200 million strategic vaccine facility at Carlow Town in South-East Ireland. The facility will support the company's expanding global business in human vaccines and biologics, and will create 170 jobs by 2011. It will be the first, stand alone human vaccine project in Ireland, and will have a formulation and sterile filling operation, as well as an R&D team to support recently launched vaccines and new product. Merck will also collaborate with Irish academia in biologics production.

Ireland won the deal after an international site study by Merck, which already has two existing operations in the country employing more than 450 people. The facility at Ballydine, County Tipperary, produces APIs, while the site at Leopardstown, County Dublin, is a corporate platform for Merck's strategic activities in the country.

Merck is one of several companies that make up Ireland's lively pharma and biotech cluster. At a recent meeting in London to discuss the future of Ireland's pharmaceutical industry, Barry O'Dowd, manager of pharmaceuticals and biotechnology for IDA Ireland (the country's foreign investment agency), pointed out that Irish pharma exports were €33 billion in 2006 compared with €18 billion in 1999. Nine of the top ten global pharma/biotech companies are located in Ireland — besides Merck, there is Wyeth, Genzyme, GlaxoSmithKline, Pfizer, Johnson&Johnson, Novartis, Schering-Plough and Bristol-Myers-Squibb (BMS). Looking further down the rankings, 17 out of the top 20, and 28 out of the top 50, pharma companies have a facility in Ireland too. Seven out of ten pharmaceutical blockbusters are made in Ireland, including Enbrel, the revolutionary new fusion protein tumour necrosis blocker treatment for rheumatoid arthritis, which is made at Wyeth's €1.3 billion plant at Grange Castle near Dublin, the world's largest biopharmaceutical production facility. O'Dowd also adds that Ireland is attracting companies from India and the Far East. "We are also in the generic space — for instance, Teva is located in Waterford with a six sigma operation with worldscale PAT."

Biotech is very big in Ireland too — with Lilly, Elan, Genzyme and Wyeth. O'Dowd is particularly proud of Centocor's new facility in Cork, a €500 million investment that has been completed ahead of schedule and under budget. It is now in the validation phase prior to producing four biologic drugs. BMS, Organon and Allergan are also making biologics and new therapeutics in Ireland. "As biotech grows we expect more investment and we will be competing for this," says O'Dowd. Meanwhile, Lilly is building a new plant in Kinsale and Pfizer's new development centre in Cork is an investment of more than €100 million. On the small molecule side, Ireland has Servier, Wyeth, and Takeda. "Small molecules are not all heading to India," he comments. "We are still winning projects in these areas."

Pharma is the biggest contributor to corporation tax in Ireland. In fact, it is the low tax that draws companies there in the first place, as Ireland is famous for having the lowest corporation tax in EU, and this is something the Irish Government is strongly committed to keeping. The country also has tax credits for R&D and, according to Jim Ryan from the consultancy CIRCA Group Europe, there has been a range of other initiatives too. For those starting out, there is financial support to purchase consultancy and innovation vouchers worth €10000. Universities and research centres are also expected to conduct R&D and can get Government support to do so. "Within the next 3 years, we're hoping for 55 companies with an R&D spend of over €2 million. That's an ambitious target, but the initiatives are being managed quite well and are well-coordinated."

However, Ireland has really had to build up its infrastructure to support the pharma and biotech industries. The National Development Plan (2000–2006), an investment programme supported by private, public and EU money that was set up to focus on areas of the Irish economy, placed a large emphasis on R&D and invested €2.5 billion. This led to the Programme for Research in Third Level Institutions, which has built up university infrastructure, with 33 new research centres and 97000 m2 of dedicated space — half of this investment being for life sciences. Meanwhile, Science Foundation Ireland (SFI), founded in 2000, has been charged with the task of building up the quality and scale of basic R&D. It has also funded 118 principal investigators and a number of centres for science, engineering and technology that bring together academia and industry. These include the Alimentary Pharmabiotic Centre at University College, Cork, the Regenerative Medicine Institute at the National University of Ireland, Galway, and the Biomedical Diagnostics Institute, Dublin City University.

Regarding industry, IDA brings in foreign investment, while Enterprise Ireland funds and encourages the indigenous industry. The country now has 65 biotech companies in drug discovery, pharmaceuticals or diagnostics, which employ more than 2000 workers and have a turnover of approximately €300 million. The biotech start-up rate has been approximately 18 companies a year — five of which are from the higher education sector.

Ireland has a distinct competence in development and manufacturing while discovery research is beginning to happen, although, according to O'Dowd, the country has traditionally not been strong in this area. "The development and manufacturing model, with collocation of the two, is the model we are trying to promote — taking compounds from research units into Phase I with smooth technology transfer. Merck has done this, for example, and this plays to our knowledge agenda with our new graduates coming through."

Of course, there will always be competition from elsewhere. Singapore is focused on very similar sectors. "We are always looking at them and them at us," says O'Dowd. The populations, GDP and employment levels are similar for both countries, but laboratory costs and inflation are greater in Ireland. In Singapore, you can negotiate zero tax for the short term and it has a very strong infrastructure, especially since it built its giant science city, Biopolis, but Ireland is catching up. It is much more politically stable, and has cheaper power and a more streamlined planning system. The Irish climate is also good for biotech (which needs water!). O'Dowd also adds that there are fewer local engineering personnel in Singapore and, once you start to subcontract work, you lose accountability. Accordingly, safety can be an issue in Singapore, while the Centocor plant in Cork has just gone for one million hours without an accident.

Both countries are winning projects — Ireland got the Merck vaccine project, but Novartis opted for Singapore when it needed a new facility. IDA is trying to increase R&D in Ireland by understanding company needs, facilitating collaborations and working closely with SFI. "A lot of it is about personal relationships," O'Dowd concludes. "Ireland is coming at this in a joined up way, with people, tax breaks and a shared agenda."

"Collaboration is a very important element," Ryan agrees. "We have got the infrastructure for this collaboration now — we had a poor infrastructure until the 1990s — and we are now spending to create what others already have. In the next 5 years, our indigenous and multinational companies will be developing in parallel."